- Establish Advisor Relationship
Given the personal nature of your finances, it is important to find an advisor whom you trust and with whom you feel comfortable. Interview multiple advisors before moving forward with your planning needs, as you may “click” with one and not another. It’s to the planner’s benefit too, since we need clients to be open and honest with us. Consider also whether the advisor works with clients in similar situations to yours, and how they are compensated. We, like many others, offer a free initial consultation for this step. With the Introductory Questionnaire in hand, we will talk about your goals, time frame, and other personal specifics in order to define together the services that would best meet your needs.
- Gather Your Information
This step, largely done by you, is collecting the information needed to perform the planning services. This typically involves filling out short questionnaires and making copies of or uploading account statements or other documents. Much of it may even be done in your preparation for the initial meeting, as gathering information often helps clients to better define their goals and concerns. After the meeting, we review your information and provide you with a Financial Planning Agreement outlining proposed services and fees. You can then choose whether or not to engage Clarity.
- Analyze Your Information
In this step, we study the information you have provided, and sometimes ask follow-up questions if we need to learn more about something in particular. Depending on the scope of services agreed upon, we may look at areas you hadn’t considered, so the presented plan can highlight items you hadn’t thought to address. Cash flow, risk management, investment management, estate planning, tax planning, education planning, long term care planning, and retirement planning are all focuses of financial planning.
- Develop Your Plan
Using the above analysis, a financial plan discussing your situation is created, with both written observations and recommendations related to your goals. These are presented to you in a meeting, where we can discuss the conclusions and any next steps. This meeting is best done in person, but could be via phone. The written document goes home with you for further review and consideration. As many people have more goals than they can immediately fund, you will likely need to prioritize them at this point in the process. As financial planners, it is our goal to give you the information you need to make your own informed decisions.
- Implement Your Plan
Depending on the nature of your goals, this step may be relatively simple or fairly complex. Some examples of implementation are setting up a 529 plan for your child, meeting with a qualified attorney to execute a will, and consolidating old 401(k) plans into a single IRA. We are happy to provide referrals and specific resources to help you in the implementation process. Filling out actual paperwork would require additional hourly fees, so we recommend that you try to do this on your own. In the event you become an investment management (link to investment page) client, transfer paperwork would be completed for your signature.
- Monitor Your Plan
Monitoring your plan is a lifelong process. It is important to remember that financial plans are not static; they should be reviewed periodically to adjust for changes in employment, family circumstances, goals, and other unexpected events. Marriage, divorce, new children, upcoming retirement, and family illness/death are the most common triggers to review your financial situation, but less obvious ones may be a desire to change careers or experiencing less comfort with risk that was previously acceptable. Over time there are also external changes, like tax legislation, that may alter recommended strategies. For instance, 529 plans changed the college savings landscape, and Roth IRAs added new opportunities for retirement planning. With hourly financial planning, this may be the most difficult step to manage. It is up to you to call a planner when your situation changes or new needs arise.